LIGHTHOUSE FOR THE MIND
NOVEMBER 2001
SPECIAL FeATURES
Million-Dollar Letter
Below, you will find the "Million-Dollar Letter".  Please read this information first before using it.  This letter is simply a request for validation as prescribed by the Fair Debt Collection Practices Act.  It only applies to debt collectors collecting on unsecured debts.  The second part is a form that the collector is requested to complete and return to you.  If they do this, it will prove why you do not owe the collector any money.  It will help in your defense if you are sued.  Debtors who take advantage of this letter typically do not lose collection cases, and less than 1% of them end up in court.
Debt collectors are companies who have accepted the assignment of a credit account for a contingency or a conditional fee.  An assignment is not necessarily a sale or purchase, but it is a transfer of certain collection rights.  Because the assignee, in most cases, cannot provide the same services or products, as did the original creditor, and because the assignee was not named specifically in the account agreement between the account holder (you) and the creditor, the assignee debt collector cannot legally enforce the debt collection.  Another reason that the debt collector has no standing to enforce a claim against you is because, even if there is a written assignment agreement between the creditor and the collector, it was not something to which you agreed and cannot be enforced against you.  The collector chose to incur the debt, and did it at his own peril. The law does not allow the collector to recover from his loss by suing you.
Moreover, creditors and collectors make insurance claims and tax deductions foruncollectible accounts.  They would not lose any money if you did not pay, but the real secret is that banks do not make loans.  The customer who signs the promissory note or the application for credit is the depositor who provides the funds for the "credit" account.  In law, this is known as a "failure of consideration" or"breach of contract" and it violates disclosure obligations under the Truth in Lending Law (Regulation Z).  Most people do not know this and that is why many collectors are able to collect.  In fact, you can maintain a claim for "money lent" against your bank or mortgage company because the bank owes you the value of your account.  They obtained your money and property for free by accepting your creditapplication or depositing your note.
This request for validation should not be sent to the creditor.  There is another process that is used when dealing with a creditor which involves sending a notice of final payment with terms.  The terms allow you to terminate the agreement as being paid in full and restore your credit rating once the creditor charges it off and after the collector discontinues collection efforts.  This process also allows you to stop creditor and collector phone calls immediately.  You will most likely end up with two charge-off items on your credit history, one from the creditor and one from at least one collector.  The creditors can be removed or corrected to "paid as agreed" because of the final payment terms in the written notice.  The collector's claim can be removed because it is not your account.
This is recommended for people:
  • With no incentive to pay 
  • Who are either not eligible 
  • Who don't want to file bankruptcy or make a consolidation 
  • Who can accept a diminished credit rating for about one year.

[Subscriber]
[Address]
[City State ZIP]

[Collector]
[Address]
[City State ZIP]
[Phone Number]

[Date] 

Re       Inquiry Dated _____________:  Account No. (none) 

Greetings:

Thank you for your recent inquiry.  This is not a refusal to pay, but a notice that your claim is disputed.  This is a request for validation made pursuant to the Fair Debt Collection Practices Act.  Please complete the attached form and follow its instructions and your claim will be processed as soon as this information is received.

Please be advised that I am not requesting a "verification" that you have my mailing address, I am requesting a "validation;" that is, competent evidence that I have some contractual obligation to pay you.

You should also be aware that sending unsubstantiated demands for payment through the United States Mail System might constitute mail fraud under federaland state law.  You may wish to consult with a competent legal advisor before your next communication with me.

Your failure to satisfy this request within the requirements of the Fair Debt Collection Practices Act will be construed as your absolute waiver of any and all claims against me, and your tacit agreement to compensate me for costs and attorney fees.

Best regards,
[Debtor]
 
 

CREDITOR DISCLOSURE STATEMENT
Name and Address of Collector (Assignee):

____________________________________________________________________________
Name and Address of Debtor:

____________________________________________________________________________
Account Number(s):

____________________________________________________________________________
What are the terms of assignment for this account?  You may attach a facsimile of any records relating to such terms.

____________________________________________________________________________
Have any insurance claims been made by any creditor or assignee regarding this account?

Yes / no
____________________________________________________________________________
Has the purported balanced of this account been used in any tax deduction claim?

Yes / No
____________________________________________________________________________
Please list the particular products or services sold by the collector to the debtor and the dollar amount of each:
 

____________________________________________________________________________
 

____________________________________________________________________________
Upon failure or refusal of collector to validate this collection action, collector agrees to waive all claims against the debtor named herein and pay debtor for all costs and attorney fees involved in defending this collection action.

X________________________________            _________________
  Authorized Signature for Collector                                 Date

Please return this completed form and attach all assignment or other transfer agreements that would establish your right to collect this debt.  Your claim cannot be considered if any portion of this form is not completed and returned with the required documents.  This is a request for validation made pursuant to the Fair Debt Collection Practices Act.  If you do not respond as required by thislaw, your claim will not be considered and you may be liable for damages for continued collection efforts.  Please allow thirty days for processing after receipt of your request. 
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